MBA2394 How To Create an HR Department on a Budget + Free Ride Friday

0:09Heyo! Welcome to the$100 MBA show, business lessons you can count on. I'm your host, your coach, your teacher, Omar Zinhome. I'm also the co-founder of Webinar Ninja, an independent software company I started back in 2014. And today's episode is Free Ride Friday. On Free Ride Fridays, we give away a free ride to the$100 MBA program, a practical online program showing you how to become a better entrepreneur, 100 % guaranteed over at 100mba.net. If you want to win a free ride, just leave us an Apple Podcast rating and review, and you enter our weekly random draw we call Free Ride Friday. Listen in on Friday, just like today, to see if you won.

0:45We announce this week's winner a little bit later in the episode. In today's episode, you will learn how to create an HR department on a budget. As you're growing your business, you know that human resources is an important thing. It helps establish organization in your company. It nurtures the culture of your team. It frees you up from a lot of admin work, answering messages about leave and evaluations and pay and all kinds of stuff. But how do you do it when you have a tight budget, when you're just starting out? when really you don't need a full-blown HR department. Well, that's what today's lesson's all about.

1:18I'm gonna show you what we've done in our company when we were growing, how we built an HR department that's effective, that's robust, that works brilliantly in a low-cost way, in a way that's easy to manage and just as organized and professional as a big HR department in a company. So let's get into it. Let's get down to business. Let's first talk about why you would need HR. Basically, I see HR as the business of running a business. Okay? When you run a business, you have a team. You don't really need an HR department per se if you don't have a team. If you're a solopreneur or it's just you and your co-founder, then you pretty much can manage it without an HR department.

1:56But once you start building a team, you have team members and employees and contractors and all kinds of people, you need a way to organize their ability to work for you. When you hire somebody, there's a transaction happening here, right? They're doing work for you in exchange for a bunch of stuff that you're going to give them. Like time off, like salary, like maybe an annual bonus. And maybe these bonuses are based on evaluations. This could be quarterly annual evaluations. You might organize a team retreat or offsite, and that's part of their benefits package. If your team members are not contractors or full-time local employees, probably you're going to have to deal with medical.

2:35Now, that's a lot of boring administrative stuff that's very time consuming that you really shouldn't be doing as the leader of your business. You need to maximize your time on bringing in revenue, building great products and services, serving your customers. The thing about this administrative work in HR, it's very time consuming. It's very tedious and it just never stops because as your team grows, the more demands will be on you as an HR personnel. So you need to kind of build a system, even if you just have a small team and you have a handful of people working for you, because this system will serve you, will free you up and help you spend more time on what really grows the business.

3:14So basically, having an HR department frees you up, gives you time, it buys you time and relieves you a lot of the stress and worry that you'd have to deal with trying to follow with people, making sure that they're being heard, that their leave requests are being approved, all that kind of stuff. So in today's lesson, I'm going to give you three steps, three ingredients that you can add to your business that can build a very simple but effective agent department on a budget. Let's start with number one. And this one, though simple, is incredibly effective. I'm starting with this one because it's going to do the bulk of the work for you and eliminate a lot of headaches.

3:53And that is a team handbook. Building out a team handbook is going to help you tremendously. I learned this actually from Laura Roeder, who was the founder of Meet Edgar. And she was incredibly helpful with showing us her very own team handbook. And we actually used it as kind of a template, as an example to build our own. Now, what's the purpose of the team handbook? The team handbook is basically the rule book. It's like the instruction manual of anything HR. This is great because it means you don't have to answer any more questions. When anybody asks a question like, how many leave days do I have?

4:26What are the public holidays that are available in the company? Want to plan my vacation? You could just say, hey, no problem. Check the handbook and here's the link. All the information is in the handbook. All the rules, all of the benefits, all of the things that they need to know so they are on the up and up on their arrangement. How your company works. Now, the team handbook is not just about like days off and increments and all kinds of stuff like that. But it also tells them about the mission, the vision of the company, how to succeed at the company, the organizational chart so they know who their boss is and who to report to and who they're responsible for.

4:59And it's incredibly helpful because it's a source of knowledge. It's the place that people are going to go. Now, what's great about it is that as you're building your handbook, you're basically building out your HR rules. You're building out your policies because you're going to make decisions like how many days are you going to give each team member off for holiday? How many sick days? What about maternity leave? What about public holidays? And you do this once and then you can just refer to it, right? Of course, you can adjust as you go along. And this is why I highly recommend you make this document a live document, like a Google Doc, where anybody can access it via the cloud and you as the administrator or somebody on your team can easily adjust it, modify it.

5:38Our team handbook is something that we give immediately when we hire somebody so they can read it, understand it, and get most, I would say 95 % of all their questions answered by just reading the handbook. Now, your job is once you've created this handbook and handed it to your team members is not to fall into bad habits. What are bad habits? Bad habits are answering questions, having discussions you don't need to have. Meaning when somebody asks the question and the answer is in the handbook, you tell them go to the handbook. Why? Because if you just answer the question or you explain it to them, then the handbook is useless.

6:10Okay. They're never going to go to the handbook. They're just going to go to you because you're the one who's giving the answer. So your job is to always say, hey, just check out the handbook. All the answers are there. They might ask you another time, a third time, a fourth time, but eventually they're going to get the message that all their answers are in the handbook and they'll just go to the handbook first before asking any questions. And having a handbook actually adds value to your company because if one day somebody acquires a company, this is a part of the value. They have a system to follow.

6:39They have an SOP. They can easily just pick up where you left off rather than having to reinvent the wheel and having to adjust to it. I can't stress how powerfully important and helpful having a handbook is because it answers a lot of the questions the team has. It also forces you again to establish the policies, the rules that you have in your company. Ingredient number two that you can add to create a powerful and inexpensive HR team is a virtual assistant, right? They don't need to be virtual. They could be in person, but get an assistant. An administrative assistant can really help you save a ton of time.

7:13This person becomes your personal assistant, helps you manage your calendar, manage your email, that kind of stuff. But also it can be the point of contact for your team if they have any HR related questions. For example, we ran our team retreat earlier this year and my EA, Romina, who's also the head of HR, so to speak, was the point of contact for any questions. It came to the retreat, like, how do I get my ticket so I can get to the destination? Which one is my hotel room? Who am I staying with? What time is dinner? All these questions that you're going to have in a team retreat are not being asked of me anymore, right?

7:49They're not going, being directed to me. They're being directed to Romina, saving me time, saving me effort. And this is just one incident, a retreat, but this is throughout the year. They have a contact person that they can speak to and ask questions. Now, by the way, this is better for you and better for the team because they don't want to bother you, the boss, the founder, the person that actually pays their salary with every little question. Having somebody they can just go to that is not that person is a lot more comfortable for them. So, investing in an executive assistant is incredibly good value because they'll manage and direct all the questions possible.

8:27They'll direct them to the handbook and you become hands-off. They'll help you organize things. For example, recently one of our team members was ill and we sent them flowers. I didn't send them flowers. Romina did. Romina did that and helped us out. Your EA will also help you with ingredient number three. So what's ingredient number three? Ingredient number one is the handbook. Two is an assistant. And three is software. There's a lot of great software out there to help you manage your team when it comes to HR. I've tried a lot of different pieces of software. Some of them are really complicated, overblown, and I really don't need all the bells and whistles.

9:05Most people in business, especially online business, teams that are less than 500 people, don't need most of the HR software that's out there. It's just too much, too complicated, and too expensive, to be frank. We use a software called HR Partner. I'm not an affiliate. I'm not endorsing them. They're not a sponsor, nothing like that. They're just a great product. They're pretty inexpensive in terms of what they offer. It's exactly what you need, nothing you don't. And it's a good software for you to manage your team. I think you should start considering having HR software once you have a team that is five people or more, because now it's starting to get crowded.

9:40Now you need some organization. Now, what does this software do? Well, it basically allows you to organize all HR matters. It's a place where your team members can log in and apply for leave. You can see their evaluations because you can upload your evaluations there. They can see if they got a salary increment. They could see what are the public holidays that are ahead that they can take time off. They can see their leave balance. They can see their sick leave balance. And of course, you can manage this, when I say HR software, in a very simple software like Google Sheets, if you're really on a strict budget.

10:12But HR Partner makes it super simple for every team member to log in and see things privately. This really gives a little bit of polish to your company. If a new hire comes in and they see that you have an HR software and a place for them to manage their benefits, it leaves an impression, makes it look like you are a pro. It adds value to the workplace. It also gives you one source to go to to understand what's happening with everybody on your team, where everybody's at. It's also a good place to evaluate if your policies are working. For example, if you feel like maybe you're not giving enough time off or paid leave.

10:49A good way to test this theory is to go into the software and see how much leave has been taken. Is everybody's leave depleted already and it's only April? Are people taking enough leave? And that's just one example. So three ingredients for a great HR department on a budget. One, creating a team handbook. Number two, hiring an assistant to run your team. And three, using some sort of HR software to put it all together. That wraps up today's lesson. I hope it helped. If it did, leave us an Apple Podcast rating and review and let us know what you think of the show. We read every piece of feedback.

11:22Thank you so much in advance for doing that. Today's episode is not over, though. It's Free Ride Friday. Let's see who won this week's free ride. And the winner is MValesco07. That's the handle on Apple Podcasts. MValesco says, a must listen. Five stars. I recently discovered the$100 MBA, and I'm so glad I did. I'm consistently impressed by the depth of knowledge and insights shared in each episode. I truly learn something valuable every time I tune in. Highly recommend. Give it a listen. Thanks, Em Valesco, for that great review. Your mission is to email me over at omar at 100mba.net so we can hook you up with the free ride to the$100 MBA program over at 100mba.net.

12:01If you want to win a free ride, just leave us an Apple Podcast rating and review and you enter our weekly random draw. Listen in on Friday just like right now to see if you won. It's that simple. Before I go, I want to leave you with this. Anytime you create something new in your business, a new department, a new policy, a new activity, always start with the most minimal viable version of that. You'll be surprised how much you can get done, how efficient that minimal viable version can be. There's no reason to spend money just to say to spend money, you know, just spend money on things that actually matter, that actually help your team and add value to your company.

12:37Thanks so much for listening and I'll check you in Monday's episode. I'll see you then. Take care.

12:47We'll be right back.